This document provides an overview of small-scale methanol production technologies. Methanol is primarily used as a chemical feedstock and fuel. While most new methanol plants are large-scale, small-scale plants (15,000-20,000 tons/year) may be viable due to abundant and low-cost natural gas resources across North America. Small-scale plants have lower capital costs than large plants. The document analyzes the economics of small-scale methanol production and identifies several technology developers pursuing small-scale technologies. Key risks include commodity price volatility, unproven technology, high capital costs, and market competition.

1. 1
Natural Gas Utilization via
Small-Scale Methanol Technologies
April 2015
Commissioned by
Ben Franklin Technology Partners’
Shale Gas Innovation & Commercialization Center
Prepared by
ADI Analytics LLC

2. 2
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3. 3
Table of Contents
Table of Contents 3
Table of Exhibits 4
1.0 Executive Summary 5
2.0 Introduction 8
3.0 Methanol and its Applications 11
4.0 Methanol Demand and Supply 13
5.0 Small-Scale Methanol Plants 16
6.0 Key Risks 21

4. 4
Table of Exhibits
1. Most segments accounting for natural gas demand in the U.S. are stagnant
save power generation, which has grown mainly at the expense of coal.
8
2. North American methanol and oil prices move together, and natural gas has
become significantly cheaper.
9
3. Chemical derivative production and fuel use account for most methanol use,
which is dominated by China and the rest of Asia followed by Europe and
North America.
12
4. Supply and demand analysis for methanol shows significant growth in global
demand and North American capacity over the next five years.
13
5. Several new methanol and methanol-derivative plants have been announced
in the U.S. thanks to low natural gas prices and a robust demand growth
outlook for methanol.
14
6. Estimated capital costs for most large-scale methanol plants currently
planned in the U.S. range from $500 to $700 with an average of ~$530 per
ton per year of capacity.
15
7. Estimated capital costs for small-scale methanol plants range from $700 to
$1,100 per ton per year of capacity.
16
8. Cash cost of methanol produced from small-scale plants are quite
competitive across a wide range of feedstock and capital costs and historical
methanol prices.
17
9. U.S. Gulf Coast dominates methanol demand followed by Midwest and East
Coast.
18
10. Several firms are developing small-scale gas monetization technologies with
a representative few summarized here.
20

5. 5
1.0 Executive Summary
 The Shale Gas Innovation & Commercialization Center, an initiative of Ben Franklin
Technology Partners, commissioned ADI Analytics LLC to prepare this white paper with an
independent assessment of the technical and economic viability of small-scale methanol
plants.
 The discovery and rapid development of shale gas and unconventional oil basins has
dramatically increased the supply of natural gas in North America. However, natural gas
demand in the United States (U.S.) is growing much slowly in comparison to supply. As a
result, natural gas supply is forecasted to significantly outstrip demand, which has led to the
recent decline in natural gas prices.
 Low natural gas prices have helped in driving new attention and interest to natural gas
monetization options, which will play an important role in spurring natural gas demand.
One promising gas monetization option is the production of methanol using small-scale
plants.
 Conceptually, small-scale methanol plants offer a number of advantages. The first
advantage is that methanol prices track those of oil thereby providing a significant arbitrage
to exploit if the natural gas feedstock is available as cheaply as it is in the U.S. Second,
small-scale methanol plants have lower capital costs in comparison to traditional large
plants making them attractive to a wider range of investors. Third, methanol is a liquid
chemical product that can be transported easily and cost-effectively offering the ability to
monetize natural gas from fields that are remote, have limited pipeline connectivity, or
have relatively poor production or economics. Finally, methanol is a versatile chemical with
multiple applications and end-uses.
 Methanol is the simplest alcohol and is a light, volatile, colorless, and flammable liquid with
a distinctive odor. Methanol is produced mainly using a two-step catalytic chemical
process. It is an important chemical with a wide range of applications and end-uses. Each
of these applications and end-uses can be segmented into three major categories.
 The first category, which accounts for more than half of methanol demand, is the use of
methanol as a chemical feedstock. The second category relates to the use of methanol in
fuels and accounts for more than a third of methanol demand. Finally, methanol is used for
a number of fragmented applications such as solvents, antifreeze, wastewater
denitrification, and ethanol denaturing.
 Thanks to rapidly-growing applications such as olefin production and fuel use, methanol
demand is growing at a robust 6% annually (some analysts believe growth rate could be as
high as 8%) and is forecasted to be more than 90 million tons per year (mtpy) by 2020. In

6. 6
comparison to 2013, this translates to more than 60 mtpy of additional methanol demand
over the next five years globally.
 China drives the bulk of this demand growth as it uses methanol for a wide variety of
applications and, in particular, its use as a fuel and as a feedstock for olefins. Other Asian
economies such as India account for additional demand growth in Asia. Further, the new
supply of natural gas liquids (NGLs) such as ethane and propane in North America (also
facilitated by the unconventional boom) has led to the announcement of a number of new
petrochemical cracker projects. These projects seek to crack NGLs into ethylene and
propylene that will be then converted to polymers and other chemicals some of which may
require methanol as a raw material. Therefore, new petrochemical crackers in North
America may lead to additional demand growth for methanol in North America.
 Several new natural gas-fed methanol plants have been announced in North America while
new plants have been announced based on coal in China. Most of these new plants will
have large capacities as many of the rapidly-growing applications, e.g., methanol to olefins,
require large volumes of methanol. A couple of the new methanol plants announced in
North America are being developed by companies in China that are seeking methanol
exclusively for producing olefins.
 New methanol and methanol-derivative plants that have been announced in the U.S.
collectively total over 30 mtpy of capacity. However, only a few are likely to be constructed
and completed for a variety of reasons including global commodity prices, worldwide
methanol demand, and investor appetite.
 Financing and total investment will likely be particularly challenging given the high capital
costs as well as the high capacities planned for these projects. Capital costs for large-scale
methanol plants vary from $200 to $700 per ton per year of capacity although the average
is approximately $530. Collectively, the largest of these projects are anticipated to cost as
much as $750 million to $2 billion.
 Although most new announcements have been for large methanol plants with capacity
ranging from 1 to 2 mtpy, there may be potential for small-scale (15,000 to 20,000 tons per
year of capacity) methanol plants in North America. The primary driver for small-scale
methanol plants is the supply of cheap natural gas across shale plays in North America. In
several shale plays, there are numerous wells that produce small or economically
immaterial volumes of gas and/or are located in regions with limited pipeline connectivity.
 Economics typically drives commercial adoption of new technologies and, therefore, costs
and economics of small-scale methanol plants were analyzed. Capital costs for small-scale
methanol plants were assumed to range from $700 to $1,100 per ton per year of capacity
based on primary and secondary research including interviews with technology developers.

7. 7
 Cash costs of producing methanol from small-scale plants are well below the historical 10-
year average price for methanol (corresponding to an oil price of $94 per barrel) in North
America across the entire range of natural gas costs of $2 to $5 per million Btu. However,
methanol production costs from small-scale plants are higher than the lowest methanol
price (corresponding to an oil price of $26 per barrel) seen over the past 10 years. These
economics suggest that small-scale methanol plants would be able to deliver a competitive
return to investors unless methanol prices fall to the lower range seen over the past
decade.
 Another factor that investors in small-scale plants will have to consider is methanol demand
in their markets and the competitive landscape. Most of the U.S. methanol demand is in
the Gulf Coast followed by Midwest and the East Coast. Both Midwest and East Coast
regions will have methanol demand in excess of over 1 mtpy by 2020, which may be
sufficient to support several small-scale methanol plants.
 Even so, small-scale methanol plants supported by natural gas from the Marcellus, Utica, or
Bakken shale plays would still have to compete with methanol imports from the Gulf Coast.
The cost of methanol transportation by railcar from the Gulf Coast to the Midwest or East
Coast will likely range from $40 to $70 per ton based on estimates gathered from a major
railroad. These railcar-based transportation costs should be added to cash costs of
methanol from large-scale plants thereby potentially impacting some of the
competitiveness of large-scale plants in comparison to small-scale plants.
 A third factor that will play an important role in the commercial deployment of small-scale
methanol plants is the availability of process technology. Currently, no process technology
has been commercially proven for small-scale methanol plants. However, a number of
start-up companies are pursuing the development of small-scale methanol technology and a
representative set of companies have been identified and discussed.
 Stakeholders should carefully consider a number of risks associated with small-scale
methanol plants including (1) commodity pricing risk, (2) technology risk, (3) capital cost
risk, and (4) market and competitive risk all of which have been further described in this
white paper.

8. 8
2.0 Introduction
The discovery and rapid development of shale gas and unconventional oil basins has
dramatically increased the supply of natural gas in North America. In the U.S., natural gas from
shale basins accounted for less than 1% of total natural gas supply in 2005; today shale basins
provide approximately 40% of total natural gas production. In addition, there is further
potential for supply growth based on the ever-growing estimates of the North American shale
gas resource base.
In comparison, U.S. natural gas demand is growing much slowly than supply. Further, most of
this growth in U.S. natural gas demand is coming from power generation and to a modest
extent from industrial demand, while the other key segments, e.g., residential and commercial
are stagnant as shown in Exhibit 1. Natural gas demand for power generation has primarily
stemmed from replacement of retiring coal-fired power plants. Even so, power generation can
account for only limited growth in natural gas demand because electricity demand in the U.S. is
growing at only ~1% annually.1
As a result, natural gas supply is forecasted to significantly
outstrip demand leading to the recent decline in natural gas prices.
Exhibit 1. Most segments accounting for natural gas demand in the U.S. are stagnant save
power generation, which has grown mainly at the expense of coal.1
1
U.S. Energy Information Administration

9. 9
Low natural gas prices have helped in driving new attention and interest to natural gas
monetization options, which will play an important role in spurring demand. However, most
industry attention has focused on a few options, e.g., the production of liquefied natural gas
(LNG) to export to Asia and Europe, conversion to liquid transportation fuels such as gasoline
and diesel, production of chemicals such as methanol and ammonia through large plants, and
use as transport fuel. A number of other options including small-scale methanol production
have not received much attention or interest.
Natural gas monetization through the production of methanol using small-scale plants could be
a promising option. In principle, small-scale methanol plants offer a number of advantages.
The first advantage is that methanol prices track those of oil (see Exhibit 2) thereby providing a
significant arbitrage to exploit if the natural gas feedstock is available as cheaply as it is in the
U.S. Second, small-scale methanol plants have lower capital costs in comparison to traditional
large plants making them attractive to a wider range of investors including small businesses,
entrepreneurs, and project developers. Third, methanol is a liquid chemical product that can
be transported easily and cost-effectively offering the ability to monetize natural gas from fields
that are remote, have limited pipeline connectivity, or have relatively poor production or
economics. Finally, methanol is a versatile chemical with multiple applications and end-uses.
Exhibit 2. North American methanol and oil prices move together, and natural gas has
become significantly cheaper.2
2
U.S. Energy Information Administration; Methanex Corporation

10. 10
Given these advantages for methanol and their small-scale production, the Shale Gas
Innovation & Commercialization Center (SGICC) commissioned ADI Analytics to conduct an
independent assessment of the technical and economic viability of small-scale methanol plants,
which has been summarized in this white paper. Although oil prices have dropped significantly
and quickly since this study was commissioned, the research and analysis presented here are
relevant as capital projects are designed to operate for 20 to 30 years and witness multiple
commodity price cycles. Further, the findings of this study are based on analysis over a wide
range of natural gas feedstock cost and methanol product pricing scenarios. As a result, this
white paper assessing the feasibility of small-scale methanol production plants as an option to
monetize natural gas from basins such as the Marcellus should find relevance across a wide
range of stakeholders.

11. 11
3.0 Methanol and its Applications
Methanol is the simplest alcohol and is a light, volatile, colorless, and flammable liquid with a
distinctive odor. Although it is quite similar in appearance to alcohol consumed by human
beings, methanol is highly toxic and unfit for human consumption. Methyl alcohol is popularly
called methanol although it has historically also been described as wood alcohol since it was
originally produced as a byproduct of the destructive distillation of wood.
Today, methanol is produced mainly using a two-step catalytic chemical process. Catalytic
reforming is the first step during which natural gas is converted to synthesis gas. In the second
step, synthesis gas is converted to methanol. A number of other feedstocks including coal,
biomass, and municipal waste could also be converted to synthesis gas for further conversion to
methanol and are used in several regions based on their availability and cost.
Methanol is an important chemical with a wide range of applications and end-uses. Each of
these applications and end-uses can be segmented into three major categories. The first
category, which accounts for more than half of methanol demand, is the use of methanol as a
chemical feedstock. The second category relates to the use of methanol in fuels and accounts
for more than a third of methanol demand. Finally, methanol is used for a number of
fragmented applications such as solvents, antifreeze, wastewater denitrification, and ethanol
denaturing. Each of these categories is described in further detail below.
1. Methanol use as a chemical feedstock: Methanol is used to produce a number of
chemicals with formaldehyde and acetic acid being the largest chemical derivatives. Each of
these derivatives is further converted into a wide range of products including fibers, paints,
resins, adhesives, insulation, and dyes. Methanol use for these traditional chemical
derivatives is growing at a slow to moderate pace. However, another chemical derivative
application – cracking methanol to produce olefins such as ethylene and propylene – is
growing rapidly due to its widespread adoption in China. Economic growth in China has
accelerated demand for plastics which are produced from olefins. However, China lacks
traditional olefin feedstocks such as naphtha or natural gas liquids but has plenty of coal
and has, therefore, relied on the latter to produce methanol via syn-gas produced through
gasification.
2. Methanol in fuels: With some modifications to engines, methanol can be used as a fuel for
transportation. Several countries are using methanol as an automotive fuel including China.
Another transportation segment is marine vessels where methanol could be a cost-effective
and environment-friendly fuel in order to comply with new international environmental
regulations. In addition, methanol can be converted to ethers such as methyl tertiary-butyl
ether (MTBE) and dimethyl ether (DME).
Although the U.S. had mandated and later banned the use of MTBE as a fuel additive, its use
as an octane-enhancing gasoline additive has continued in several countries. A smaller

12. 12
application is the use of DME as a fuel to power engines that run on diesel. Finally,
methanol is also used to produce biodiesel, which is typically blended with diesel in several
regions including U.S. and Europe.
3. Other applications: Methanol is also used in a number of fragmented applications that
individually do not consume large volumes but collectively account for approximately 10%
of total demand. These include municipal and private wastewater treatment facilities that
use methanol to facilitate nitrogen removal from effluent streams. Similarly, methanol
could be used as a carrier for hydrogen for small and large fuel cells. Finally, several high-
horsepower engines, e.g., those used to produce distributed power also use methanol.
Exhibit 3 provides a breakdown of methanol demand by application. Although not shown
graphically, nearly 60% of methanol demand is for traditional segments that are growing slowly,
while 40% of demand is for rapidly growing applications such as methanol-to-olefins and fuel
uses.3
Finally, Exhibit 3 also shows methanol demand by region. It is clear that China and Asia
drive methanol demand following by Europe and North America.
Exhibit 3. Chemical derivative production and fuel use account for most methanol use, which
is dominated by China and the rest of Asia followed by Europe and North America.4
3
Methanex Corporation
4
Methanex Corporation; ADI Analytics
Formaldehyde
30%
Methyl
tertiary-butyl
ether 12%
Fuels 12%
Acetic Acid
10%
Other 8%
Dimethyl ether
6%
Methanol to
olefins 5%
Solvents 5%
Biodiesel 4%
Methylamines
4%
Chloromethan
es 2%
Methyl
methacrylate
2% Dimethyl
terephthalate
1%
China
43%
Rest of Asia
Pacific
21%
Europe
20%
North America
12%
Latin America
4%
Methanol Demand by Derivative
(Percent)
Methanol Demand by Region
(Percent)

13. 13
4.0 Methanol Demand and Supply
Thanks to the rapidly-growing applications such as olefin production and fuel use, methanol
demand is growing at a robust 6% annually (some analysts believe growth rate could be as high
as 8%) and is forecasted to be more than 90 mtpy by 2020 as shown in Exhibit 4. In comparison
to 2015, this translates to more than 23 mtpy of additional methanol demand over the next five
years globally.
China drives most of this demand growth as it uses methanol for a wide variety of applications
and, in particular, as a fuel and as a feedstock for olefins. Other regional economies such as
India account for additional growth in Asia. Further, the new supply of natural gas liquids
(NGLs) such as ethane and propane in North America (also facilitated by the unconventional
boom) has led to the announcement of new petrochemical cracker projects. These projects
seek to crack NGLs into ethylene and propylene that will be then converted to polymers and
other chemicals some of which may require methanol as a raw material. Therefore, new
petrochemical crackers in North America may lead to additional demand growth for methanol
in North America. North American demand and production capacities for methanol are also
shown in Exhibit 1, which reflects the slower pace of demand growth relative to global demand.
Exhibit 4. Estimated global and North American demand and capacities for methanol show
significant growth in global demand and North American capacity over the next five years.5
5
IHS; Methanex Corporation; MMSA; Jim Jordan & Associates; Reuters; ADI Analytics
0
20
40
60
80
100
120
140
2010 2015 2020
Global Demand and Capacity
(Million Tons Per Year)
Capacity
Demand
0
5
10
15
20
2010 2015 2020
North American Demand and Capacity
(Million Tons Per Year)

14. 14
Although North American demand is growing more slowly than global demand, production
capacity is forecasted to grow at a dramatic pace as methanol production has traditionally
gravitated to regions with cheaper supply of feedstocks such as coal and natural gas. As a
result, new supply is more likely to come up in China and North America driven by coal and
natural gas, respectively, than elsewhere. Several new natural gas-fed plants have been
announced in North America while new plants based on coal have been coming up in China.
Most of these new plants will have large capacities of 1 to 2 mtpy as many of the rapidly-
growing applications, e.g., methanol to olefins, require large volumes.
Growing global demand for methanol and low natural gas prices in North America have
attracted a wide range of investors including oil refiners, investors, and entrepreneurs in large-
scale methanol plants. Further, some of the new methanol plants announced in North America
are being developed by Chinese companies that are seeking methanol for producing olefins.
Exhibit 5 shows a representative list of new methanol and methanol-derivative plants that have
been announced in the U.S. collectively totaling over 30 mtpy of capacity. However, only a few
are likely to be constructed and completed for a variety of reasons including global commodity
prices, worldwide methanol demand, and investor appetite. Projects proposed by leading
methanol, chemical, and refining companies such as Methanex, Celanese, Valero, and Lyondell
Basell are most likely to be completed given their developers’ strong balance sheets and/or
active presence across the methanol value chain.
Exhibit 5. Several new methanol and methanol-derivative plants have been announced in the
U.S. thanks to low natural gas prices and a robust demand growth outlook for methanol.6
6
ADI Analytics
Company Location Start-up Cost, $B Capacity, mtpy
Zero Emission Energy La Place, LA 2016 1.00 1.8
Celanese Corp. Clear Lake, TX 2015 0.79 1.3
Valero Energy Corp. St. Charles, LA 2016 0.70 1.6
Methanex Corp. Geismar, LA Operational 0.55 1.0
Methanex Corp. Geismar, LA 2016 0.55 1.0
LyondellBasell Channelview, TX (Restart) Operational 0.15 0.8
G2X Energy Pampa, TX 2015 0.04 0.06
NW Innovations Kalama, WA / Westward, OR 2018 1.80 3.6
OCI Partners LP Beaumont, TX 2017 1.00 1.8
List of Methanol Plant Announcements
Company Location Start-up Cost, $B Capacity, bpd
Emberclear Corp. (MTG) Natchez, MS 2017 2.80 14,000
G2X Energy (MTG) Lakes Charles, LA 2017 1.30 12,500
Sundrop Fuels Inc. (MTG) Alexandria, LA 2015 0.58 4,000
Marcellus GTL LLC (MTG)
Allegheny/Blair Townships,
PA
2015 0.25 2,000
SoCalGas Co. (DME) Southern California Operational 0.05 3,000
List of MTG and DME Plant Announcements

15. 15
In addition to the large companies developing methanol plants, a few small players are also
likely to complete their projects. Two companies that have made considerable progress are
Zero Emission Energy Plants (South Louisiana Methanol project) and G2X Energy (Pampa
Methanol Facility) both of which are building methanol plants that may eventually be expanded
to convert methanol to gasoline. A number of other small companies that have announced
methanol plants are in early stages and completion of their projects depends on a number of
factors including their ability to raise financing.
Financing and total investment will likely be particularly challenging given the high capital costs
as well as the large capacities planned for these projects. Exhibit 6 shows normalized capital
costs for large-scale methanol plants. Capital costs for large-scale methanol plants vary from
$200 to $700 per ton per year of capacity although the average is approximately $530.
Collectively, the largest of these projects are anticipated to cost as much as $750 million to $2
billion.
Exhibit 6. Estimated capital costs for most large-scale methanol plants currently planned in
the U.S. range from $500 to $700 with an average of ~$530 per ton per year of capacity.7
7
Company estimates; ADI Analytics
$192
$412
$514
$550 $550
$615 $617 $625
$712
Lyondell
Basell
Valero NW
Innovation
Works
Methanex
Corp.
Methanex
Corp.
Celanese Yuhuang Fund
Connell
South
Louisiana
Methanol
Average
$532

16. 16
5.0 Small-Scale Methanol Plants
Although most new announcements have been for large methanol plants with capacities
ranging from 1 to 2 mtpy, there may be potential for small-scale – 15,000 to 20,000 tons per
year of capacity – methanol plants in North America. The primary driver for small-scale
methanol plants is the supply of cheap natural gas across shale plays in North America.
In several shale plays, there are numerous wells that produce small or economically immaterial
volumes of gas and/or are located in regions with limited pipeline connectivity. For example,
wells in the Bakken, where the primary goal is to produce crude oil, routinely flare natural gas.
In others such as the eastern part of Marcellus, several gas wells have been shut down due to
low natural gas prices, the lack of higher-priced liquids production, or the absence of pipelines.
In such cases, small-scale methanol plants could be attractive due to several conceptual
advantages. These include (1) oil-correlated prices for methanol providing a significant
arbitrage to exploit if natural gas is cheap as it has recently been in the U.S.; (2) lower capital
costs in comparison to traditional large plants; (3) production of a liquid chemical product that
can be transported easily, cost-effectively, and has multiple applications and end-uses.
Economics drives commercial adoption of new technologies and, therefore, the costs and
economics of small-scale methanol plants were analyzed. Exhibit 7 lists the key assumptions
for capital costs, feedstock prices, and other financial metrics. Capital costs for small-scale
plants were assumed to range from $700 to $1,100 per ton per year of capacity based on
primary and secondary research including interviews with technology developers.
Most technology developers acknowledge that small-scale methanol plants will cost more than
large-scale methanol plants on a normalized basis because of the lack of economies of scale.
However, reliable capital costs estimates are not available since currently there are no
commercially operating small-scale methanol plants. Even so, total capital costs and
investment for small-scale methanol plants will be significantly lower than those for large-scale
plants making them accessible to a wider range of investors.
Exhibit 8 shows how the cost of producing methanol from small-scale plants varies as a function
of natural gas feedstock price as well as normalized capital costs. In general, cash costs are well
below the historical 10-year average price for methanol (corresponding to an oil price of $94
per barrel) in North America across the entire range of natural gas costs of $2 to $5 per million
Btu. However, methanol production costs from small-scale plants are higher than the lowest
methanol price (corresponding to an oil price of $26 per barrel) seen over the past 10 years.
These economics suggest that small-scale methanol plants would be able to deliver a
competitive return to investors unless methanol prices fall to the lower range seen over the
past decade.

17. 17
Exhibit 7. Estimated capital costs for small-scale methanol plants range from $700 to $1,100
per ton per year of capacity.8
Exhibit 8. Cash cost of methanol produced from small-scale plants are quite competitive
across a wide range of feedstock and capital costs and historical methanol prices.8
8
ADI Analytics
$700
$900
$1,100
Low Medium High
Capital Cost for Small-Scale Methanol Plants
(U.S. Dollar Per Ton Per Year of Capacity)
$2.50
$4.00
$5.00
Low Medium High
Other assumptions
Capacity, tons per day 50
Gas per ton of methanol, MM Btu 36
Plant life, years 20
Interest rate, percent 15%
Operational cost, percent of capex 10%
Natural Gas Feed Cost
(U.S. Dollar Per Million Btu)
$0
$100
$200
$300
$400
$500
$600
$0 $1 $2 $3 $4 $5 $6
10-year average methanol price = $436
(Oil price of $94/bbl)
Capex at $1,100 per ton
Natural Gas Cost, $ / MM Btu
Capex at $900 per ton
Capex at $700 per ton
10-year minimum methanol price = $171
(Corresponding oil price of $26/bbl)
10-year maximum methanol price = $552
(Oil price of $100/bbl)
MethanolCashCost,$/ton

18. 18
Another factor that investors in small-scale plants will consider is methanol demand in their
markets and the competitive landscape. Exhibit 9 provides an estimate of methanol demand
across the four major regions in the U.S. Most of the U.S. methanol demand is in the Gulf Coast
followed by Midwest and the East Coast. The extensive chemical industry in the Gulf Coast
drives methanol demand in the region and new ethane crackers proposed in the Midwest or
the East Coast may drive further demand for methanol. Even without additional chemical
plants in the Midwest or the East Coast, both regions will have methanol demand in excess of
over 1 mtpy by 2020, which may be sufficient to support several small-scale methanol plants.
Exhibit 9. U.S. Gulf Coast dominates methanol demand followed by Midwest and East Coast.9
However, small-scale methanol plants supported by natural gas from the Marcellus, Utica, or
Bakken shale plays would still have to compete with methanol imports from the Gulf Coast.
The cost of methanol transportation by railcar from the Gulf Coast to the Midwest or East Coast
will likely range from $40 to $70 per ton based on estimates gathered from a major railroad.
These railcar-based transportation costs should be added to cash costs of methanol from large-
9
U.S. Census; ADI Analytics
West Coast
Gulf Coast
Midwest East Coast
0.90 1.00
1.20 1.40
2014 2020
1.00 1.10
1.30 1.50
2014 2020
4.30 5.00
4.80
5.70
2014 2020
0.30 0.40
0.40 0.50
2014 2020
Low-end
High-end

19. 19
scale plants thereby potentially impacting some of the competitiveness of large-scale plants in
comparison to small-scale plants. Even so, investors should carefully evaluate methanol cost
curves from different plants and locations as they consider small-scale plants in the Midwest or
the East Coast.
A third factor that will play an important role in the commercial deployment of small-scale
methanol plants is the availability of process technology. Currently, no process technology has
been commercially proven for small-scale methanol plants. However, a number of start-up
companies are pursuing the development of small-scale methanol technology and a
representative set of companies have been identified and discussed in Exhibit 10. Although a
number of companies are active in this area and are investing significant time and effort
through a diversity of approaches, it is too early to definitively establish the technological
viability of small-scale methanol plants. Similar to cost curves, investors will have to carefully
evaluate process technology availability, maturity, and costs before considering small-scale
methanol plants.

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Exhibit 10. Several firms are developing small-scale gas monetization technologies with a representative few summarized here.
R3 Sciences
 Developing a homogeneous catalyst-based 3-30 tons/day methanol plants
 Claims process operates at a lower temperature and pressure with higher syngas
conversion per pass and selectivity to methanol leading to lower capex
 Plans to transition process through pilot / demonstration scales in 2014-15 with a
commercial unit targeted by the end of 2015
Maverick Synfuels
 Offers small-scale, skid-mounted, modular, 10-30 tons/day methanol plants using
commercial steam methane reforming and methanol synthesis catalysts
 Claims a novel engineering design with small footprint and short delivery time
 Process tested at a pilot / demonstration scale but not commercialized yet
 Announced JV for a plant in Canada and partnership with a fabricator for plants
Oberon
Fuels
 Developed proprietary skid-mounted, small-scale production units to convert methane and
carbon dioxide to DME and methanol at 10-30 ton/day capacity
 Focusing development and commercialization effort on DME than methanol
GasTechno
GTL
 Developing direct conversion process for gas to methanol and other products
 Process tested at pilot-scale and now targeting demonstration scale
 Claims ability to handle rich gas streams with limited pre-treatment and …
 … A wide range of scales from 1 to ~450 tons per day of products
 Company estimates capital costs of $400-$1,350 for 17-55 tpd plants
Primus Green
Energy
 Developing a technology to convert syn-gas into various products including methanol
 Commissioned a 100,000 gallon per year demonstration plant in 2013 with plans for a
commercial plant in 2015
 Claims to be a simpler variant of ExxonMobil’s Methanol to Gasoline process with lower
capital and operating costs driven by process improvements and modular manufacturing

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6.0 Key Risks
A wide range of stakeholders including but not limited to investors, entrepreneurs, project
developers, oil and gas producers, technology developers, and government agencies are likely
interested in the technical and commercial viability of small-scale methanol plants. These
stakeholders should carefully consider a number of risks associated with small-scale methanol
plants, which have been described below:
 Commodity pricing risk: The economic viability of small-scale methanol plants depends
heavily on natural gas feedstock and methanol product pricing. High volatility or
commodity prices beyond those assumed in the analysis presented in this report should be
carefully evaluated for impacts on costs and economics.
 Technology risk: A number of companies are developing small-scale methanol technologies
but none of them have commercially deployed a plant. Although methanol production is
mature at larger scales, small-scale methanol plants may pose risks that are currently
unknown or unanticipated mainly because existing technologies have not been scaled up to
commercial levels at this time. Careful evaluation of technical viability with emphasis on
scale-up risk should be conducted before investing in small-scale methanol plants.
 Capital cost risk: Given the lack of commercially operating plants, capital costs for small-
scale methanol plants were assumed for the economic analysis in this report. These capital
costs should be verified and validated through careful cost estimation and planning.
 Market and competitive risk: Finally, methanol demand and supply should be monitored
carefully for implications on small-scale methanol plants. As several large-scale methanol
plants are likely to be built in North America, it is possible that some of them may be able to
produce methanol at costs much lower than those of small-scale plants. Further, the scale
of some of these companies would allow them to discount transportation costs and thereby
provide significant competition in the market.

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